Posted
by
Zonkon Friday December 01, 2006 @04:23PM
from the business-of-making-shinies dept.

mustardayonnaise writes "CNN Money is reporting that graphics chipmakers Nvidia and AMD (who recently acquired NVidia rival ATI) said Friday that they received subpoenas from the US Department of Justice as part of a probe into potential antitrust violations involving graphics processing units and cards. Each company controls about 25% of the entire graphics chip market. According to the article, Intel, who makes their own fair share of graphics chipsets, has yet to be included in the investigation."

Is is just a coincidence that both Nvidia and ATI were each awarded Xbox contracts (Nvidia = Xbox, ATI = Xbox 360)? Perhaps there was some behind the scenes deals to thwart the development of FOSS graphics drivers.

With the top two graphics chip companies controlling the majority of the market, this could have happened. Perhaps the "patented code" in the drivers that prevents them from opening the source is Microsoft-owned?

I know that it will never happen, but it would be nice to bring it up just in case someone is listening.

Is is just a coincidence that both Nvidia and ATI were each awarded Xbox contracts (Nvidia = Xbox, ATI = Xbox 360)? Perhaps there was some behind the scenes deals to thwart the development of FOSS graphics drivers.

Or maybe it's just as you say and those are the top two graphics companies and MS wanted the best.

It's like the "Never ascribe to malice, that which can be explained by incompetence" corallary to Occam's razor except more like "never ascribe to malice, that which can be explained by good business

Is is just a coincidence that both Nvidia and ATI were each awarded Xbox contracts (Nvidia = Xbox, ATI = Xbox 360)? Perhaps there was some behind the scenes deals to thwart the development of FOSS graphics drivers.

Right, because the motivation couldn't have been wanting to get a top-notch GPU at an affordable price from a company that knows how to build GPUs successfully. Nope, it was just one more salvo in Microsoft's covert war against FOSS.

I believe the primary motivation for the XBox switch from NVidia to ATI in the 360 generation is because NVidia refused to renegotiate the contract with Microsoft as production costs for the GPUs dropped. Microsoft, having only just entered the hardware arena, lacked the foresight to account for dropping production costs of the GPU in the original contract. It is just Microsoft screwing NVidia one more time after the GeForce FX (See: http://en.wikipedia.org/wiki/Nvidia#Shortcomings_o f_FX_series [wikipedia.org]).

I think NVIDIA didnt like microsoft that much after microsoft forced them to throw away all those perfectly good chipsets just because some hackers had read out the internal ROM contained therein (and made NVIDIA take the hit for what was probobly a microsoft problem assuming microsoft wrote the code in the hidden ROM)

They are. AMD and a class of consumers are sueing Intel now in a big antitrust case for monopolizing the x86 microprocessor market. Huge case. I am one of the attorneys representing consumers.
I am also looking for buyers of GPIs from Nvidia or AMD to find out their experience in pricing. Do you know any?

Okay, but how does he know they haven't been subpoenaed? Obviously, as a spokes person, someone should tell him if they _have_ been, but the lack of anyone telling him does not mean they haven't been. So he has to check to be 100% sure. This seems normal to me...

CNN Money is reporting that graphics chipmakers Nvidia and AMD (who recently acquired NVidia rival ATI) said Friday that they received subpoenas from the US Department of Justice as part of a probe into potential antitrust violations involving graphics processing units and cards. Each company controls about 25% of the entire graphics chip market.

Meanwhile, the RIAA, who has a stranglehold over the music industry, gets to drive their truckloads of money straight to the bank.

Honestly, it's a very good point, why are two agressively competative companies, having half the market share being examined for antitrust, while the RIAA fatcats, who are obviously a TRUSTworthy consortium not?

Are they competitive? Last time I checked you could only buy an nvidia or ati pcie card. So while there are plenty of intel intergrated graphics out there, gaming is controlled by two corporations that are "deadlocked" with no outside competition.

They are highly competitive against each other. they are only deadlocked because of their competition, if one just sat back they would soon see their asses handed to them.

Antitrust issues come in when the consumer is getting screwed. in the case of video cards you may only have 2 major options, however they are constantly trying to out innovate the other in order to gain some market share (and not fall behind) defiantly a good situation for the consumer.

there are many monopolies in industries, however if the consumer isnt being adversely affected then the issue isnt raised near as much

It doesn't seem logical anyhow. Sure, there may be only two high capability options, but that doesn't make them monopolies. Besides, there AREW a few other companies out there... Intel doesn't have the other 50%. So, you have at least THREE major corporate players, all within a factor of two of each other marketshare-wise, plus third (fourth?) parties. Intel might not really directly compete with NVidia, but ATI has had and continues to have integrated solutions for laptops, at least. I've tried one; it's n

That's inaccurate to say the least. The majority of ATI/nVidia based video graphics cards are produced by 3rd parties, so obviously the market for video cards is healthy(maybe too competetive, I hear the margins are razor thin).If you are speaking of the graphics chips themselves, there is obviously competition. Both companies are enduring and adapting to a visciously short product revision cycle, where every couple months both companies release revamped versions of their graphics chips. This has had an inc

Sorry I am with the parent, I have never seen a Kroger that wasn't a dedicated grocery store (well they have a small liquor section but so do many grocery chains). Not an east coaster here though, midwest.

Indeed. The Fred Meyers supermarket chain is owned by Kroger, yet they have greatly expanded what products they sell. The grocery section of the store is extremely similar to any Kroger, yet there will also be a clothing, household goods, building products, tools, gardening, and electronics section.There exist still a few older Fred Meyers stores that have only the grocery, clothing and electronics sections. The reason I shop at Fred Meyers is because I once worked for them. I have a strong preference to sh

Both companies are enduring and adapting to a visciously short product revision cycle, where every couple months both companies release revamped versions of their graphics chips. This has had an incredibly positive effect on the market for software utilizing ever-more complex 3D graphics, as well as keeping the graphics card manufacturers afloat.

My point exactly, neither company is competing with the other, they are both releasing nearly the same chips(performance wise) and nearly the same rate. If the car market worked the same way, you'd see the same amount of ford/gm/toyota cars on the road.

look at big 3 cars lately? obviously not... GM, Chrysler, and Ford do exactly the same thing ATI and Nvidia do.. they all release the exact same size/style/colors of SUV/sedan nearly every year. Drive by a car dealer some time and look. Even the foreign makers are getting on board. Almost all competitive markets are like this.. they follow the leaders. Although ATI and Nvidia are more like Lexus and Audi or Mercedes and BMW... of course their cars look a lot alike and have similar features too, not much

gaming is a drop in the bucket of the PC market... only about 10% max of all video cards qualify as "gaming". The bigger market is OEM and that's pretty evenly matched. Via has the old S3 "chrome" series, SIS has the XGI Voltari, Intel has "extreme", Nvidia, ATI are name brand...All those companies also make chipsets and several make CPUs so it's not unfair by any means... and there's a few independents out there like Matrox and Bitboys Oy.. but there's hardly any "monopoly". ATI and Nvidia are both high

"CNN Money is reporting that graphics chipmakers Nvidia and AMD (who recently acquired NVidia rival ATI) said Friday that they received subpoenas from the US Department of Justice as part of a probe into potential antitrust violations involving graphics processing units and cards. Each company controls about 25% of the entire graphics chip market."

Meanwhile, the RIAA, who has a stranglehold over the music industry, gets to drive their truckloads of money straight to the bank.

Maybe NVidia and ATI need to bring 3Dfx back as a straw man to claim that there's no anti-trust issues. They could bring back S3 but people would fall down laughing. The days when graphic chips truly sucks are long gone.

that are making gaming graphics cards that are actually really useful - their great cards are making it impossible for competators to compete with their lackluster cards! It must be a case worth of an antitrust suit!

this stinks of somebody important being bribed to start this... But maybe they're after Intel, and neither of them? ATI USED to be a powerhouse...they had like 40% of the OEMs at one time with Rage Pro's. But that was a long time ago. Intel is using it's CPU/Chipset/networking/wireless/nand market share to drive off graphic makers. Note how they co-released VIIV with ATI... then promptly ditched all the ATI concept designs? Microsoft used both ATI and Nvidia for Xboxes. In current Gen Wii and PS3 both

The interesting thing here would be to find out where the campaign financiers are. If I was to try to list a few 'top picks' that the government should be investigating, NVidia and ATI would not be on the list at all. My guess is that someone wants to tie up these two companies in a big legal mess forcing blow millions of dollars on research/lawyers so that something else can happen (or not happen). Something about this doesn't smell right.

I know... it's sarcasm, but you didn't mark it up that way specifically.But these kind of situations are most likely built on patents (licensing, trading, whatever) as a means to lock out competitors. This is obviously not what the patent system is supposed to be used for.

I'm certain there are a multitude of patents related to the implementation of OpenGL, for example. It would be my guess that the costs for implementing cards that would otherwise violate these patents would cost more than they could sell

To the US government, it's more a case of: look, there are two companies making billions of dollars, and they hardly contribute anything to lobbying or campaigns! It must be a case worthy of an anti-trust suit!

Seriously, consider Microsoft's political contributions before and after they started being hit with anti-trust suits. It sure looks to me like their practices being officially approved was based more on contributions than on any actual cha

Ah, so the DOJ is perfectly happy with multibillion-dollar competition-free contracts for "rebuilding Iraq" and blatantly monopolistic behavior by telecom providers, they think allowing Microsoft to racketeer OEMs into forcing customers to buy Windows with every machine they sell is absolutely fine, and of course they won't even dare to think about prosecuting other branches of their own government for numerous violations of the Constitution and war crimes, but when two companies, by persistently competing with each other and achieving near-perfect parity for long periods of time, create one of the most staggeringly cutthroat markets on the planet, they must of course be investigated.

Well since there is no mention of what is actually alleged to be the problem, I can't really say whether or not this investigation has any merit. Certainly neither company has a monopoly, so the only thing I can think of is that the DOJ suspects some kind of collusion (the 'trust' in 'anti-trust' refers to multiple organizations agreeing to lock out competitors, not just individual monopolies).

Frankly I'm not going to assume anything. Yeah, the graphics card market is competitive and NVidia and ATI have done a very nice job of leapfrogging each other over and over into the stratospheres of graphics performance, and I hope that doesn't change. However if they are using illegal business tactics to ensure it doesn't become a 3-way race, then that has to stop. Kinda like when Rambus (*spits*) turned around and sued the Dramurai, who it turned out were colluding to control prices and lock out Rambus (*spits*).

Of course I'd rather they spent their time worrying about all the other things, but I'm sure it's not an either-or proposition, and again we're operating under a dearth of facts. Though I'll admit that unlike anti-trust action against Microsoft and Intel, I'm not already aware of shady business practices on the part of these two companies that would warrant it.

Has it occured to anybody yet that the DOJ might be preparing to go after Intel, and they've subpoenaed AMD and Nvidia as the other two CPU-makers? If AMD + Nvidia have 25% of the GPU market and intel the other 75%, then it seems to me that AMD and NVidia have information that would be needed in an investigation of Intel. So whether or not it's about CPU or GPU, it could easily be about Intel. (Don't forget NVidia makes CPUs too)

However if they are using illegal business tactics to ensure it doesn't become a 3-way race, then that has to stop.

I would be more suspicious of them using illegal business tactics to inflate prices, rather than to obstruct a 3rd party. Have you checked prices on high end 3D cards lately? Plus, there are no viable competitors in the consumer 3D arena right now, at least not from a performance standpoint.

what we consider performance doesn't matter in the scale of the PC market top end graphics are the top 5% like luxury cars.. that'd be like suing BMW because "Beamers" aren't cheap enough.. won't happen. I like the go after Intel approach, without more info, they're just supeonas. Intel is quietly strong arming all the OEMs away from discrete graphics as well as processors... perhaps there's another "bundling" suit building over Centrino type deals? The majority of the PC market is "Fords" with "good en

There is another way to look at it. May be the DOJ is thinking why is there no single monopoly in this market. And ofcourse that monopoly must be Intel's. So they have sued the other two. So that Intel can become the Monopoly.

Just because there are 2 companies with competing products doesn't mean that they don't collude on price fixing, etc. Ever hear of a firm called Archer Daniels Midland? They have lots of competitors worldwide. In the mid/late 1990s they were found guilty of price fixing along with their global "competitors." Just Google "ADM price fixing" for the whole story. Also, there's a great segment on "This American Life" about the executive that helped nail ADM. It's a very twisted tale about how this fellow w

Some one suggested on another forum this might be the case. It seems plausible actually, now that I think about it. We've only seen video card prices rise in recent history, even on the high end. Of course intel probably wouldn't have been involved, they don't have any video offerings that are highend.

Maybe iNTEL is buying a judge to try to stop AMD and NVIDIA from getting together?

There's a timing problem there, but since one would assume a corrupt corporation trying engaging in court warfare as a defense against that other suit, one can't be sure that the timing problem is not being ignored.

(And, yes, I do suspect iNTEL of doing exactly what AMD says they do in that other suit, which is why I won't by iNTEL's CPUs, and why I'm not buying Macs any more. I do put my money where my mouth is.)

I worked for a company that made 3D chips. We had a pretty good component. Not astoundingly fast, but a competitive mid-range component more than adequate for the current crop of games. Faster and cheaper than the GeForce 2 when that was still considered a competitive card.

So, the sales people went to various board manufacturers, and said "Do you want to buy our chip". The board manufacturers said Gosh. That's perfect for our mid-range market. We'd love to. Our sales people went home happy. nVidia's sales people said "Do you want us to keep selling you our chips?" The board manufacturers sid "Yes, of course we do". nVidia said "well, don't buy chips from that other upstart company".

Apart from the huge board manufacturers who would be able to seriously dent nVidia's sales, none of them were interested in us any more.

Frankly, as a consumer, I wouldn't buy a graphics card from an upstart (or a board that has built in graphics from an upstart). It's a chicken-egg problem.

Many folks got stuck with 3d hardware cards and no company and/or no supported drivers... with Nvidia (dunno about ATI), you can take their TNT2 card and still get it to work with their -current- drivers (even on Linux!). Had it been some unknown-brand card, you might not even get X to come up (and have to use Windows in VGA mode).

So yeah... competition sucks. What a small corp can do is compete on openness. Sure, I'd buy some unknown brand if it follows some open standard, has open source drivers, and works with Linux out of the box. In fact, that's the only way I see how a small corp can get ahead in this business.

you can take their TNT2 card and still get it to work with their -current- drivers (even on Linux!)

You may want to take a look at Nvidia's list of currently supported cards. [nvidia.com] Let me know if you see the TNT2 on there. In fact, this Gentoo Nvidia guide [gentoo.org] clearly shows the TNT2 in their "list of unsupported legacy video cards."

The number of times this particular order of events happens in the tech world qualifies it as Standard Operating Procedure.

I didn't RTFA, I'm more interested to hear the chain of events that got the DOJ started on this particular issue. As I recall, it was intense lobbying in DC by Microsoft's competitors that finally got them into trouble.

Which competitor(s) got the DOJ started on this one? Microsoft? Intel? ?

If I'm a little skeptical that is all that prevented you from coming to market. See, there have been (and are) other companies that try to compete with nVidia and ATi. Matrox, S3, XGI, and Bitboys have all tried at one time or another to directly compete in the performance market. In every case the basic problem has been the same: They failed to deliver on their claims. Bitboys failed to deliver at all. They kept talking up this awesome accelerator but nobody ever actually saw the thing in final silicon. Th

It wasn't exactly a performance chip, but did compete with nVidias more profitable, older chips. And yes, there were other problems. It was a reasonably successful chip, but we could only really sell to Hercules.

Not sure. Might have been the corporate policy of not competing with our customers. If it was our only product we would have had to do this. But this was just the graphics division of a huge larger company. If they wanted to, they could have given the chips away and competed in the same underhand way as nVidia. But they didn't want to.

Or pair-up with a smaller board manufacturer company that did not buy from nVidia.

but remember, it's not Nvidia that's REALLY the bad guy. The add in board market is only about 25% of graphics... it's the INTEGRATED market that rules. Nobody would take a chance on you because most of the card makers you'd know by name drive market/mind share off getting the latest Geforce 8800 first, even though they don't sell a lot of them. Try going to a real PC maker.. Dell, Gateway, HP... you'd get laughed out for not being INTEL...

the sales people went to various board manufacturers, and said "Do you want to buy our chip". The board manufacturers said Gosh. That's perfect for our mid-range market. We'd love to. Our sales people went home happy. nVidia's sales people said "Do you want us to keep selling you our chips?" The board manufacturers sid "Yes, of course we do". nVidia said "well, don't buy chips from that other upstart company".

Plenty of examples like this were heard in the antitrust case against MS. You can bet they're doin

I remember benchmarks for the powervr... In some cases it was competitive but it lackded features like hardware T&L and framerates and benchmark were lower then the radeon/geforce of the time because of it.

Those were the primary reasons i avoided their Kyro line of graphics cards for the pc. The performance was lacking overall when you put hardware lighting into consideration.

It did depend somewhat on the game, and the resolution. T&L at the time wasn't all that well supported for DirectX games. If you used lightmaps instead of vertex lighting, then the Kyro would have done well because it was very efficient at texturing. Anything that did a lot of overdraw and blending worked very well, and the way the texturing unit worked, there was a significant drop in improvement in a geForce if you went to a fifth texture stage since that required multipass. Granted, this is kind

Let me tell you about *my* experience with Imagination Technologies and PowerVR. I (by which I mean as head of the small company I was running at the time) was a big fan of the architecture and had planned on using it and its successors for PC video cards. We also planned what could really only be described as Dreamcast 2 (using an SH-5). There was much talk back and forth and things looked wonderful. Then those larger companies you spoke of previously got interested and I was cut out. I found out by h

I think there's great competition and I doubt any sort of fixing of price has been happening. One has to wonder the motivation behind this. Why are they spending our tax dollars when it is obvious that we have great competition, lots of manufacturers, great prices, lots of power, enormous competition with integrated chipsets, etc.

Any word on why this is happening or are we just funding some Justice Dept's employee's rise to celebrity?

I'm not sure what the actual market concentrations are, but I'm going to guess something like 30%, 30%, 30%, 10% in the market (Nvidia, ATI, Intel, other). That leaves an HHI of.28, which is high but not usually good enough for antitrust action. In comparison, in the x86 processor market, the HHI is closer to.64 (duopoly), for storage about.18, and for memory about.16. Even if there were shady practices going on, its likely no individual firm had enough market power to merit antitrust charges.